Let’s assume Betty, a widow, will go to a Georgia nursing home in the near future (using 2022 eligibility rules and limits) and has the following resources:

• A home
• A retirement account
• A CD designated for burial in the amount of $14,000
• One vehicle
• Savings of $15,000
• Checking of $1,600

In addition to her resources, Betty has monthly Social Security income in the amount of $1,300.

Under Georgia’s Medicaid rules, Betty is not eligible at this time and will not be eligible until she meets the eligibility criteria as of the first moment of the first day of a month (FOM).

Although Betty’s home and vehicle are exempt resources, she has too much money (more than $2,000) and her burial CD exceeds Georgia’s $10,000 burial fund limit. The retirement account is exempt under Georgia’s rules (but other States count the account balance) as long as it pays actuarially sound distributions. The distributions will be added to monthly income as explained below.

To beomce eligible for Medicaid, Betty can spend down her excess resources and rearrainge her burial resources. Our suggestion regarding spend-down is to hire a qualified attorney to assist with the plan and to file the application.

Although the CD exceeds Georgia’s $10,000 burial exemption limit, if the CD was used to purchase an itemized prepaid burial contract, burial space items which are paid for in-full do not count toward the burial limit. As of this date, Section 2311-2 of Georgia’s Medicaid Manual states that the following items are burial space items: burial plot; grave site; crypt; mausoleum; casket; urn; niche; other repository customarily and traditionally used for the deceased’s bodily remains; vaults; headstones, markers, or plaques; other burial containers for caskets; arrangements for the opening and closing of the gravesite; contracts for the care and maintenance of the gravesite; sometimes referred to as endowment or perpetual care.

Typically, the casket, vault for the casket and headstone are a substantial portion of the prepaid burial expense, so itemizing the contract to ensure those items are excluded will cause the burial to fall within the exclusion limit.

Regarding income, Betty’s monthly gross income appears to be below the Income Cap ($2,523 in 2022), so she probably doesn’t need a Qualified Income Trust. For her retirement account to remain exempt, Betty must take actuarially sound distributions (typically RMDs are considered actuarially sound). Her RMDs will be apportioned monthly to increase her income before calculating her cost-share. Betty will be required to pay her cost-share (typically income, minus health insurance premiums, minus $70 personal needs allowance) toward her nursing home bill before Medicaid pays the balance of the nursing home bill. In other words, Medicaid will not give Betty an allowance to pay expenses associated with her home or vehicle.

Estate Recovery is something that should also be considered. Just because Betty’s home and vehicle are exempt when she applies for Medicaid does not mean they are safe. After Betty dies, the State will make a claim in Betty’s estate to recovery funds it paid for her care. Typically, the only remaining resources are the home and vehicle. Without planning, Betty simply defers the risk to those resources.

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